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Chipotle expands to burger market

April 6th, 2016

 

 

In the past several months, Chipotle has been making the headlines for the all the wrong reasons due to multiple E. coli incidents.

 

Now, Chipotle hopes that this new announcement will appear as good news for the public. On March 31, Chipotle stated that they are making plans to open a burger market called “Better Burger,” according to Bloomberg.

 

At one point, Chipotle was said to have the perfect business model, expertly crafting an image of quality and value in order to avoid the need to offer any form of discounts, value meals, or specials, which dip into profits.

 

However, this image built of paying a little more for better value was completely shattered when a national E. coli outbreak sparked from the popular chain.

 

Since the start of this outbreak in November 2015, Chipotle has been scrambling to regain its image, with disappointing results.  The chain has shut down around 50 locations where the initial outbreak occurred, according to The Washington Post.

 

They have worked closely with the FDA in order to run microbial tests at all of their locations and provide their workers with new food preparation instructions.

 

All stores in the chain closed their doors for a day in order to implement these new programs, according to the FDA.

 

When the chain reopened, it attempted to regain its customer base with a promotion involving free burritos with a special coupon code.

 

However, despite these attempts to save face, Chipotle’s stock is still seriously suffering and continuing to fall.

 

Chipotle’s image, before the fall, was based largely on quality and urban style.  Reserving the copyright to “Better Burger” attempts to regain that image.

 

In a recent statement addressing the legitimacy of this business move, Chipotle company spokesman Chris Arnold told Bloomberg, “Once you look more deeply, you realize that it actually makes a lot of sense. The fast-casual burger category grew  nearly 16 percent last year.  If you looked at the overall burger market, you would see that fast casual only represents 5 to 7 percent of it.”

 

This statement indicates that Chipotle will not be moving into the territory of restaurants like McDonald’s and Wendy’s.  Instead they will be pursuing the customer base of more “gourmet” burger joints like Steak and Shake and Five Guys Burger and Fries, according to Bloomberg.

 

Pursuing this venture serves to ensure Chipotle’s customers that everything is fine and that the company is healthy and capableenough to pursue new projects.

 

It also aids Chipotle in regaining the positive image that their entire business model is built on.  Before the outbreak, they came across as “the better Taco Bell” now they are trying to regain this association of quality as “the better Burger King.”

 

Whether or not this business move will actually serve to distract customers from previous health scandals remains to be seen. Chipotle told The Washington Post that more details about  “Better Burger” will be released within the next three months.

 

Editor’s Note: Information from Bloomberg, the FDA and The Washington Post was used in this report.